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The extent of segmental reporting and its value relevance: cross-country evidence

The extent of segmental reporting and its value relevance: cross-country evidence PurposeThe purpose of this paper is to examine the extent of segmental reporting disclosure and its value relevance to a sample of Qatari and Jordanian listed companies following the implementation review of the International Financial Reporting Standard (IFRS) 8. This was the first standard to be subjected to a post-implementation review. Annual reports are initially analyzed to investigate the level of segmental information that was published by companies in these two countries.Design/methodology/approachUsing the Ohlson (1995) model, the study employs regression analysis to test the hypotheses relating to the value relevance of the segmental disclosures uncovered. In addition, one-way ANOVA and Kruskal-Wallis tests are used to investigate any variation in segmental reporting among sectors.FindingsThe findings indicate that the amount of segmental information disclosed by the sample firms differs across sectors. Moreover, the segmental information provided (including the number of segments and the amounts of disclosure) is value relevant and can explain the variations in firms’ share prices.Practical implicationsThe results of the current investigation have implications for policy makers, including the International Accounting Standards Board, as well as for accounting regulators in Jordan and Qatar. They suggest that the segmental disclosures supplied under IFRS 8 are value relevant for equity prices in a developing country context. Compliance with IFRS 8 should thus be monitored to ensure that all firms provide the segmental disclosures that they are meant to supply under the terms of the standard.Originality/valueThis paper is one of the few to provide empirical evidence on the role of segmental reporting following the post-implementation review that was conducted for IFRS 8. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Accounting in Emerging Economies Emerald Publishing

The extent of segmental reporting and its value relevance: cross-country evidence

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
2042-1168
DOI
10.1108/JAEE-05-2017-0061
Publisher site
See Article on Publisher Site

Abstract

PurposeThe purpose of this paper is to examine the extent of segmental reporting disclosure and its value relevance to a sample of Qatari and Jordanian listed companies following the implementation review of the International Financial Reporting Standard (IFRS) 8. This was the first standard to be subjected to a post-implementation review. Annual reports are initially analyzed to investigate the level of segmental information that was published by companies in these two countries.Design/methodology/approachUsing the Ohlson (1995) model, the study employs regression analysis to test the hypotheses relating to the value relevance of the segmental disclosures uncovered. In addition, one-way ANOVA and Kruskal-Wallis tests are used to investigate any variation in segmental reporting among sectors.FindingsThe findings indicate that the amount of segmental information disclosed by the sample firms differs across sectors. Moreover, the segmental information provided (including the number of segments and the amounts of disclosure) is value relevant and can explain the variations in firms’ share prices.Practical implicationsThe results of the current investigation have implications for policy makers, including the International Accounting Standards Board, as well as for accounting regulators in Jordan and Qatar. They suggest that the segmental disclosures supplied under IFRS 8 are value relevant for equity prices in a developing country context. Compliance with IFRS 8 should thus be monitored to ensure that all firms provide the segmental disclosures that they are meant to supply under the terms of the standard.Originality/valueThis paper is one of the few to provide empirical evidence on the role of segmental reporting following the post-implementation review that was conducted for IFRS 8.

Journal

Journal of Accounting in Emerging EconomiesEmerald Publishing

Published: May 8, 2018

References